Analysts had a mixed - albeit somewhat lackluster - reaction to Sirius' subscriber numbers released yesterday. But they all seemingly agreed on one thing: the slowing retail sales are an issue.
The announcement of 8.3 million subscribers implies that quarter-over-quarter net additions came in at 654K. This indicates that year-over-year Q4 net additions are slowing (see my handy-dandy chart above to illustrate this). The fourth-quarter is very important for Sirius and XM, as it historically has given an injection of much needed subscribers, thanks to the holiday shopping season.
But Sirius' Q4 net additions came in below Bear Stearns' estimates of 690k, and far below Utendahl Capital Partners' estimate of 760k (which was a pretty aggressive estimate in the first place, in my opinion). Their total year-end subscriber numbers came in below Bank of America's model of 8.5M subscribers as well.
"We estimate that the retail channel was the culprit versus our estimate – as NPD data has been quite weak," wrote Bank of America analyst Jonathan Jacoby.
"Recall that Sirius had exceeded growth expectations in the last two quarters primarily on the strength of the OEM channel," wrote Peck in a recent client note. "We [estimate] retail gross adds declined... which likely led to the shortfall compared to our estimates."
"...we surmise that weaker than expected retail trends could have been the primary reason the company fell short of our expectations," added UCF's Alden Mahabir.
Not very encouraging news as we look at the year ahead. Something really needs to be done to spur growth at retail, because while OEM brings in the lion share of subscribers, it's obvious that retail still has a significant effect. And as U.S. auto sales are expected to slow significantly this year, it's a good idea to make sure those eggs placed are in several baskets.